Cognition, Intelligence and Language Emotion

Ep 160: How to Spend Your Money and Truly Make Yourself Happy

Why aren’t rich people happier than those with less money?

We think money will bring happiness, but research in the area of positive psychology has consistently found that having more money does NOT make us happier. Find out how to spend your money the right way so that it really can bring happiness into your life.

Affective Forecasting Error

The reason we don’t spend our money the right way is what Dan Gilbert has described as an “affective forecasting” error that our “mental simulation mechanism” makes. That is, when we think about the future we aren’t usually right about what will make us happy because we don’t think about two things:

    1. Adaptation – we adapt rather quickly to the things we buy (TVs, computer, etc.). The initial excitement wears off much quicker than we anticipate it will.
    2. Context – we don’t pay attention to the context of our lives at that future state. In other words, we focus on that new car or that new TV, but we don’t think about the bills that go along with it.

Resources on Money and Happiness

    • The fragile American Dream: Insights from the economics of happiness
    • Dunn, E. W., Gilbert D. T., & Wilson T. D. (2011).  If money doesn’t make you happy then you probably aren’t spending it right. Journal of Consumer Psychology. 21(2), 115-125.
    • Van Boven, L., & Gilovich, T. (2003). To do or to have: That is the question. Journal of Personality and Social Psychology, 85, 1193-1202.
  •  
  •  
  •  
Avatar

Michael

About Author

2 Comments

  1. Avatar

    Puneet

    September 18, 2011

    This is fantastic presentation… of a Truth of Life

  2. Avatar

    Mumtaz Allahbux

    September 18, 2011

    I think it is 100 percent correct that more money doesnot mean more happiness. It is a perception that more money will result in more happiness. Our Holy Prophet Muhammad (pbuh) advised Muslims to live a normal(saadgi wali) life. We should abondon Luxury. And try to pay Zakat from the money that Allah has given us. Zakat will help poor people. May Allah guide Muslims to abondon Luxurious life, and try to live a happy life with little means that Allah has given us.
    Regards,
    Mumtaz Allahbux

Leave a comment

Your email address will not be published. Required fields are marked *

You may also like

Cognition, Intelligence and Language Emotion Therapy

Episode 6: The Negative Side of Positive Thinking

What could possibly be wrong with thinking positively? As it turns out, there could be a lot wrong with it.
Cognition, Intelligence and Language Social Psychology

Episode 7: Blaming the Victim and other Attribution Biases

Blaming the victim - why do we do it? Are rape victims responsible for what happens to them? Are victims